SBY cracks down on oil smugglers

SBY cracks down on oil smugglers

Muninggar Sri Saraswati, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono has summoned PT Pertamina's
board of directors to a meeting on Friday after police announced
their findings on the involvement of the state oil and gas firm's
officials in the smuggling of crude and refined oil, estimated to
have resulted in annual losses to the state of Rp 8.8 trillion
(US$850 million).

"I will meet with Pertamina directors tomorrow (Friday) to be
held accountable for what has happened in the firm. This
(eradication of oil smuggling) is important in order to deal with
the (domestic) fuel problems apart from other policies," the
president said after a limited Cabinet meeting on Thursday.

The authorities, Susilo said, would investigate possible
involvement of Pertamina officials.

The Cabinet meeting was attended by, among others, National
Police Chief Gen. Sutanto, Coordinating Minister for Political,
Legal and Security Affairs Widodo Adi Sucipto, Coordinating
Minister for the Economy Aburizal Bakrie and Minister of Energy
and Mineral Resources Purnomo Yusgiantoro.

Susilo said that curbing oil smuggling has been his priority
in helping to solve domestic oil problems.

"Many don't really believe that (oil) smuggling disrupts the
security of our (oil) supplies, or that it has caused huge
financial losses to the state."

Susilo said that the authorities have so far seized 17 ships
along with 6,000 tons of diesel fuel and kerosene. A total of 58
people have been arrested -- including 18 Pertamina officials and
five foreigners -- during the operations.

"What concerns me most is that this crime has cost the state
Rp 8.8 trillion every single year. We must stop this," he said.

Indonesia has been hit hard by soaring oil prices, which are
hovering around US$65 per barrel, and has now become a net oil
importer. Costs for the fuel subsidy this year could reach up to
Rp 119.4 trillion, according to latest estimates from Pertamina.

Sutanto said Pertamina officials would likely be charged with
theft, oil smuggling and corruption, as well as violations of the
oil and gas law.

He said that a smuggling network operating in East Kalimantan
installed a seven-mile-long pipeline connecting the Lawe-lawe oil
port to offshore.

"They did it at night, between 11 p.m. and 3 a.m. They took
the oil and replaced it with sea water," Sutanto said, adding it
only took about three hours to fill a 3,000-ton tanker.

The crude oil was supposed to be transported to the East
Kalimantan and Cilacap oil refineries.

The network involves Pertamina officials and foreign
nationals. Former Pertamina oil tanker captains are also involved
in the crime.

Another smuggling network uncovered by the police operates in
the Riau Islands. The network is allegedly responsible for 70
percent of oil smuggling activities in the western part of
Indonesia.

"It involves both Indonesians and foreigners. We have informed
CID," he said, referring to the Singapore Police Force's Criminal
Investigation Department.

One of the five foreigners holds Chinese citizenship while the
rest are Singaporeans.

The police have also uncovered other oil smuggling networks
operating in Central Java, East Java and the eastern parts of
Indonesia.